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July 8, 2013

Five years ago, Melissa Callahan had a moment of clarity. She realized that, despite working long hours, in often-intolerable conditions, in a skilled position, she was earning very little money.

Callahan drives a cab in Chicago, and her moment of clarity came while waiting for a fare at O’Hare Airport. She began her day as she would any other, by going through the lengthy process of picking up her cab at the garage. Next, she drove to O’Hare and paid the fee that the City of Chicago charges cabs that service that prime location. Then Callahan joined the airport’s taxi line to wait for a fare—a wait that means hours of unpaid time in the cab.

By then, she had spent over three hours without getting a paying fare. That’s when a City of Chicago inspector decided to “spot check” all the cabs in line. Unfortunately for Callahan, the city official noticed that the “Check Engine” light had just turned on in her car. The inspector pulled Callahan out of line and revoked her chauffeur’s license pending her paying a fine. Unable to take a fare, Callahan returned the car to the garage. She still had to pay for that day’s lease. She contested the charge at an administrative hearing, but lost, and was required to pay Chicago $75 to get her license returned. After seven hours on the job, Callahan found herself almost $100 in the hole.

That’s when Callahan asked herself whether these working conditions were fair. She concluded that they were not and, like many employees in stressful, low-wage jobs, began exploring how she could fight back.

But unlike other employees, Callahan is not an “employee,” at least not according to the City of Chicago, the entity responsible for the regulating and licensing the city’s cab drivers. Instead, she and other cab drivers are considered “independent contractors.” Each of the city’s 14,000 taxis is a small business on wheels.

These small businesses are hardly lucrative. “We make some cash, but somehow we give it all back to the City,” says Ibramhim, a six-year veteran of cab-driving in Chicago, who asked that his last name not be used. “I feel like we collect money for the City.” When accounting for their many expenses, Chicago’s taxi drivers are among the lowest paid workers in the city. According to the sole comprehensive public study on their working conditions, the majority of Chicago drivers work twenty-five days per thirty-day month, in thirteen-hour shifts. On average, these drivers earn $4.38 per hour, which is approximately half the Illinois minimum wage of $8.25, and 60 percent of the federal minimum wage. Ibrahim works seventy-plus-hour weeks just to earn a subsistence living.

No one is responsible for paying cabbies a “minimum wage,” because these drivers are not considered employees. But Callahan and a group of Chicago cab drivers are challenging that long-held assumption. Under the name “Cab Drivers for Justice,” or, as most call it, “Cabbies for Justice,” they are pursuing what could be a landmark legal case. The Cabbies are arguing that not only have they been misclassified as independent contractors, and that the City of Chicago is their employer.

Are taxi-drivers employees of the City? They’re not paid by the City of Chicago, and they don’t get to take advantage of the City’s health benefits or pension plan. Theoretically they can make their own hours. They don’t have any clearly identifiable “boss”—they lease their cabs from companies like Checker and Yellow, but those groups don’t play much of a supervisory role.

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But according to both federal and Illinois law, the primary issue is who controls the cabbies’ work. When the principal directs when, where and how a contractor’s work is performed, courts (as well as the Department of Labor) are more likely to find an employment relationship. Labor lawyer Tom Geoghegan, who is representing the Chicago cabbies, said that the City is as intrusive as any employer (full disclosure: Moshe Marvit worked with Geoghegan at the law firm Despres, Schwartz and Geoghegan from 2008–10). He doubts that “the lay public realizes how extensive the City’s control” really is. “It’s as if the City is sitting right there in the back seat,” he says. The City, which declined to comment for this article, tried to have the case dismissed, arguing that even if it controls the drivers, that isn’t enough to establish an employee-employer relationship.

Recently, a federal judge in Chicago refused to dismiss the case, ruling that the extent to which the City of Chicago controls cabbies’ day-to-day activities and livelihoods may be enough to create an employment relationship. If the cabbies prevail, it will provoke a major shift in the way cab drivers, and perhaps other indirect employees, are treated.

Chicago regulates the taxi and limousine industry by granting, revoking and limiting the licenses and “medallions.” In order to lawfully accept fares, the driver must carry a chauffeur’s license, and the cab must be furnished with a small metal medallion, which are typically affixed to the cab’s hood. Initially, Chicago simply gave away the medallions, but later entered the business of selling them through auctions. And the business of medallions has proven to be lucrative. By 1991, the average price at auction had grown to $28,000; by 2009, it had ballooned to $140,000; and in 2012 a medallion cost $345,000. Because of this high cost, most Chicago cabbies now lease their cabs and medallions from companies like Checker and Yellow who own most of the medallions.

But the licenses and medallions are just the start. The City sets the maximum lease rates for different types of vehicles. The City also sets the rates that taxi drivers may charge customers. By setting these two amounts—the rates that drivers pay out and the amount they can take in—the City effectively dictates how much they can earn. The City also directs drivers to accept credit cards at no extra charge, despite the 5 percent fee charged by credit card companies. The City even requires a fee for picking up fares at O’Hare and Midway airports, and although it allows the drivers to pass the fee on to the passenger, cabbies claim that manually doing so results in reduced tips. The City also has rules regarding driver conduct. Cabbies must be “courteous” to customers at all times, and must post notices advising customers of this rule. A complaint to the City’s 311 line may result in a cabbie losing his or her chauffeur license and livelihood.

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Are cabbies really fighting a requirement to be courteous? Well, yes—because the reality is that passengers use this rule to abuse the drivers. “There is this assumption that a cabbie is the lowest chain of society,” says Ibrahim. Passengers often treat drivers poorly, or act “like there is no one in front who is driving.” Ibrahim has been called racial epithets and “terrorist.” Passengers have tried to have sex in the backseat, usually with each other, but on occasion with him (“because people think that surely the cabbie is always ready to go”). People have vomited in the car, leaving behind a “sour” stench that lingers for weeks. “They burp, they curse, they shout,” says Ibrahim, but if a driver attempts to confront them about their “boorish behavior,” they “threaten [drivers] with this 311 thing.” “The City always reminds you that your chauffeur’s license is at risk, and you might lose your money.”

Cabbies describe how the City hounds the drivers, much like a micromanaging supervisor. According to Callahan, officials from the Chicago Department of Business Affairs and Consumer Protection or police issue tickets for the tiniest violation, such as chipped paint on a vehicle. And the City keeps its hands in drivers’ pockets. Fares typically come in $7–10 increments. But the City takes drivers’ money in $100 increments. You can guess who comes out on top.

Because of the low pay, drivers often engage in “survival driving,” quickly dropping off one fare in order to pick up another in waiting. But in doing so, they risk being fined by the city. “Any wrong turn, any mistake you make, there is always a cop in the corner waiting for you,” says Ibrahim. Make a questionable u-turn to snag a new fare? “That’s another $100.”

Chicago cab drivers have challenged their poor working conditions in the past. In 1937, 85 percent of taxi drivers maintained a nineteen-day strike, seeking higher commissions on their fares. Midway through the strike, cab drivers rioted in the Loop, beating up the $7-a-day strikebreakers, ejecting passengers from scab cabs and pulling a mounted policeman off his horse and beating him. Twenty-five years later, a twenty-hour strike against Yellow and Checker led to a three-year union contract. When that contract expired, Chicago cabbies maintained a three-week strike against Yellow and Checker, ultimately winning a contract that provided increased commissions, pensions, paid holidays and other benefits.

Perhaps the most visible Chicago taxi strike was the two-week strike that took place during the turbulent 1968 Democratic National Convention. A dissident group of mostly black bus drivers coordinated a simultaneous strike in order to gain a greater voice in their union. The combined strikes temporarily crushed the transportation system during a period when the city was flooded with political operatives, protesters and media. The cab drivers established greater leverage in negotiations with the City and that strike resulted in higher wages and improved safety protocols.

Since the late 1960s, Chicago taxi strikes have been unable to secure similar benefits. The 1997 taxi strike was mounted in opposition to the City’s mandate that the drivers serve low-income neighborhoods, where they would make far less. (While the intention of that mandate is laudable, it is worth asking what other “independent contractors” would be required to provide services to specific areas.) The strike proved unsuccessful. The most recent strike took place in 2012, in protest to the 30 percent increase in lease costs, with the City permitting no increase in fares to offset those costs. Local news reports mentioned longer waits for cabs than usual, but the City claimed that there were ultimately no disruptions in service at the airports or in the city.

The Cabbies for Justice lawsuit is a marked break in strategy from past strikes, and if successful, the lawsuit’s impact would be enormous. At a minimum, it would provide several years of back pay from the City, belatedly compensating drivers who received less than the minimum wage. The City would also have to ensure that drivers earn minimum wage and overtime. It could do so either through modifications of the fare and lease formulas, or it could simply supplement cabbies’ earnings to ensure that they complied with state and federal laws. Drivers would gain the protections of state and federal laws that virtually every other employee of the City enjoys. If they seek to unionize, their efforts will be protected by federal law. If they experience race or sex discrimination, they have a mechanism to seek redress. If they are sexually harassed, they need not respond in a “cordial” manner, or risk unemployment.

Callahan, the lead plaintiff who organized the suit, sees the lawsuit as particularly valuable in building solidarity among drivers, a quality that is markedly absent in a market where 14,000 “small businesses” compete against each other. “Something very different going on right now, a very different attitude. Out of all the differences that Chicago cab drivers have…what most drivers at this point can agree on is that this lawsuit is a great idea and they are supporting it.”

For Ibrahim, increased wages could be a way to free up some time for cab drivers to organize for better conditions. “By keeping us at the wheel twelve hours a day at least, we never get to see each other and talk,” he says. “If we made [enough] money in five days, maybe we’ll have Saturdays to meet and organize ourselves.” Talking about the recent Chicago Teachers Union strike, Ibrahim remarks, “That’s my hope, one day to see cabbies as organized as teachers.”

Having succeeded in opposing the City’s motion to dismiss, Cabbies for Justice have asked the federal court to certify the case as a class action. Though the attorneys representing the cabbies are working at a drastically reduced rate, large class actions are expensive to mount. The cabbies will have to pay for several mailings to all 14,000 drivers in the city, as well as at least one expert to testify at the trial. Callahan estimates that the suit will cost a minimum of $60,000; Cabbies for Justice has raised about half that amount through a combination of funding from AFSCME, donations of $5 and $10 increments from cabbies, and individuals who make small donations through the group’s website.

Other cities, and their cab drivers, should be paying attention. While not every city maintains the same control over cab drivers, Chicago is certainly not unique. Drivers in most cities are treated as “independent contractors,” despite a plethora of rules and regulations. If the Cabbies for Justice case succeeds in federal court, similar suits are like to follow.

And the impact of this case may not be confined to cab drivers. Other city, state or federal contractors may, in reality, be government employees. A national study found that 10 to 30 percent of all employers may be incorrectly classifying employees as contractors. Such “indirect employment” relationships often deprive workers of legal protections, and allow employers to pay them less than they are due. The feeling that you are not getting your fair share sticks with you, says Ibrahim. “There is always this sense that you’re working and doing something for the City for free.”

For more on politics and activism in Chicago, read Rick Perlstein’s report on the city here.

Moshe Z. Marvit Moshe Z. Marvit, a fellow at The Century Foundation and labor and civil rights attorney, is the author, with Richard D. Kahlenberg, of Why Labor Organizing Should Be a Civil Right: Rebuilding a Middle-Class Democracy by Enhancing Worker Voice (2012).